The Complete First Home Buyer’s Guide for New Zealand
From Aaron’s YouTube: “The ONLY Video you need to learn how to buy a house in New Zealand.”
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Posted 23 April 2023
The short version
- You’ll typically need a 10% deposit (5% for new builds) and income equal to 1/5th-1/6th of your mortgage amount.
- KiwiSaver, savings, and cash gifts can all contribute toward your deposit.
- Banks stress-test mortgages at 8.6% interest rates to ensure affordability, including checking debts and childcare costs.
- New builds have easier lending rules than existing properties, especially for lower deposits.
Your 3 key numbers: deposit, income, and budget
Start by checking TradeMe to understand prices in your target area – this sets your budget baseline. For a $1M property with a 10% deposit, you’d need $100k saved and a $900k mortgage. Aaron’s rule of thumb: your household income should be about one-fifth of your mortgage amount. So for that $900k loan, you’d need roughly $180k combined income.
Your deposit can come from multiple sources: KiwiSaver (join if you haven’t!), personal savings, or cash gifts from family. The lower your target purchase price, the smaller your deposit needs to be – a $500k home only requires $50k down. But remember: your income must still support the larger mortgage repayments.
How banks actually assess your application
Banks don’t just look at today’s interest rates – they stress-test your repayments at 8.6% (as of April 2023). They’ll check if you could afford those higher payments while covering living costs, debts (keep these under $10k total), and childcare (particularly expensive in NZ for under-3s). Any Afterpay, student loans, or credit cards reduce what you can borrow.
There’s one exception: new builds (properties with recently issued CCCs) have special rules letting buyers get approved with smaller deposits more easily than existing homes. This policy could change, but currently makes new construction a strategic option for first-time buyers with limited savings.
Boosting your position and next steps
To strengthen your application: increase KiwiSaver contributions (if saving is hard), negotiate a pay rise, add flatmates (banks allow $240/week per room as income), or pay down debts. Aaron warns that starting a family before buying can significantly complicate approvals due to childcare costs.
The final step? Get pre-approved. Mortgage brokers like Aaron handle the complex calculations with banks at no cost to you. They’ll review your documents, submit everything, then guide you through the actual home-buying process – far simpler than trying to navigate it alone.
This is general information, not personalised financial advice. For advice on your situation, talk to Aaron.
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